When increasing freight rates stir the entrepreneurial spirit, and new carriers enter the market, it doesn’t take long to realize that starting a business comes with back-office and financial pressures that distract from the core task of delivering loads. It’s not uncommon that as soon as new carriers obtain their Federal Motor Carrier Safety Administration licenses, they’re also shopping for a factoring company in which to sell their accounts receivables.
“Of the $600 billion freight industry, 60% of it is small carriers with six or fewer trucks — small companies that need a lot of help,” said Alvaro Jose Otoya, founder of Summar, a Miami-based factoring solutions company. “What they do is very complicated. It’s not only picking up and delivering loads but managing the paperwork and the cash flow constraint of getting paid after 30 or 45 days.”
Summar focuses on helping small carriers with one to 30 trucks sustain and grow their businesses. Not only does its account executives help clients with selecting what brokers to haul for, invoicing, and collections. Summar also provides diesel cards and technology. Its complimentary TMS helps carriers communicate with brokers and drivers about loads and provide GPS tracking, mileage calculators, and estimated fuel consumption for each route. As a result, carriers can easily track progress and plan with all the data recorded historically.
“Our service keeps owner-operators on the road without having to worry about the back office tasks associated with running their business. said Ivan Alejandro Martinez, vice president of sales at Summar. “Especially within the last 24 months, these smaller carriers are getting busier now that loads are paying better. We can help guide them through that growth. Our account executives become the intermediary between the carrier and broker or the shipper that they’re working for.”
Summar has doubled its client base in one year, thanks to referral business from current satisfied clients. Its operational model seeks growth alongside its carriers. While Summar does service carriers with 100 to 200 trucks, those carriers have grown to that size with the funding and back-office support from Summar. The majority of its clients, like Texas-based DGL, own or manage fewer than 30 trucks.
“I’m currently booking loads for 15 drivers, some of which have their own insurance,” said Mayra at DGL. “Summar is the only factoring company I’ve worked with, and I’ve recommended them to many people because their customer service is excellent. I send my invoices, and they pay for them in less than 2 hours. Most truckers live on a day-to-day basis, and having the Summar credit guarantee gives them peace of mind and the cash flow they need to meet their expenses.’’
Summar has leveraged a larger workforce, ensuring each client gets ample attention and service. That, combined with investments in technology, allows a fleet manager to organize paperwork, loads, drivers, trucks, and trailers all in one place. All their documentation lives inside the TMS Summar provides to their clients.
“We have our marketing strategies, but almost half of our clients come referred by other clients,” Otoya said. “For a startup, what we offer is critical, but we also get larger carriers that are passing from one factoring company to us because they see the value of our services outside of factoring.”
When Florida-based CDC Transportation reached out to Summar in 2011, it had about 20 trucks and had previously worked with two larger factoring companies that lacked the personal customer service it desired.
“There was too much bureaucracy,” said Rafael, president of CDC. “We joined Summar because of their culture. If you have an issue, you can get an answer right away. They operate with immediacy, and this is critical for our business” The reps are wonderful, and the fuel card is a great deal for our fleet.”
Today, CDC has 85 trucks on the road. Along with other factors, the partnership with Summar allowed CDC to grow.
“Having the confidence that your invoice is going to get paid the same day without hiccups has been wonderful,” Rafael said. “It allows us to make decisions knowing this part of the business is taken care of.”